Elliott Management Sees Economic Disaster Brewing (New York Times)

“In its latest letter to investors, Elliott Management, a hedge fund run by Paul Singer that specializes in distressed investments, warns that the current wave of government bailouts and stimulus spending will not work and could ultimately make the economic situation worse.”

Note: You have to read this stuff in the papers. Comments like these are not broadcast on television.

Goodbye David Rosenberg (Zero Hedge)

“Never be a slave to the data – they are no substitute for astute observation of the big picture.”

We Gravitate Toward Our Self-Talk (Trader Feed)

“In all these ways, how we think affects how we feel and how we act. Our self-talk constructs our personal reality and helps define the behavioral options open to us.”

Peace

ADP job figures hit the tape at 5:15 EST this morning; within one minute the machines had bid up the e-mini futures contract 10 points. With its surplus time, the market then consolidated most of the day around the prevailing highs.

Meredith Whitney—the recipient of death threats for calling the banks out on their shenanigans long before the mainstream press deigned to comment—spoke out today warning of the bubble in credit card debt that is soon to burst. She was quickly disregarded, as Capital One Financial was bolstered by the stress test results and an upgrade. After the bell, $COF traded even higher based on reports from the Wall Street Journal that they “do not need to bolster their capital.”

Things of note:

The NASDAQ was a clear underperformer today. While the Dow and S$P futures closed above yesterday’s highs, Nasdaq futures fell short.

Despite the strength in the tape, the Philadelphia Housing Sector Index $HGX closed off just over 2 1/4%.

In spite of the weak dollar USD, the Treasury Note ZN_F held firm. It remains in the range I discussed in yesterday’s post.

10 Year Treasury Note

As the rally in equities stretches higher, an important inflection point is reached.

SPX Futures Weekly

The S&P 500 traded in a narrow 10 point range today. The pit was very quiet. As previously chronicled here, the big money has been ominously quiet during this equity run up.

The bond has been trading in a narrow range of late. However, it is trading at the high end of that range as I write.

ZN_F 120 Minute Chart

…Meanwhile, back at the office, I continue to ponder the question, When will the FED stun the world? While there are no certainties in life, only probabilities, it is the opinion of Mr. Volatility that it will be sooner, rather than later.

Given that I am positioned to profit from the wild move in volatility that will occur, I will continue to post any news or opinions I feel relevant.

Whenever it happens, the profits will be immense. The FED needs rates lower, and therefore, Treasuries must go higher. All paths lead back to that central theme. The FED needs something to happen. They have very powerful discretion at their disposal. Don’t fight it. Ride along. All roads lead to Rome.

The other themes that will work are including, but not limited too: i) A massive move higher in Gold and Silver ii) A massive move to zero for many REITs and iii) A massive move lower in the Euro $EURUSD.

Peace